Managing the Family Business: Leadership Roles
Managing, as opposed to leading, is about getting a group to operate efficiently and effectively. Managing is done by planning and budgeting, organizing, analyzing problems, building and using management systems, prudently allocating resources, and providing performance feedback. Managing is a complement to leading.
So much of business and family success has to do with good execution--getting jobs done well, on time, and on budget. Thank goodness for good managers of businesses and families. Like all CEOs that I teach at Harvard, Nelson Sirotsky spent a lot of his time as CEO of RBS managing (that is, developing the efficiency and effectiveness of) particular aspects of the business. He did a lot of planning, organizing, and problem solving.
Most of the family business leaders that I see are strong managers. There is room for improvement in some management techniques, but these leaders are programmed to manage things. In fact, too much--to the point where they focus so much effort on management that their companies tend to be over-managed, under-led, and under-governed. It's natural for CEOs, particularly family members who grew up in the family company and know it well, to become focused on its operating effectiveness. But too much focus here generally means they give too little attention to the leadership and governance needs of the organization. We devote a lot of effort in the Owner-President Management program at Harvard correcting this pattern.
I often wish there was an Owner-President Management program for the leaders of families! Families that own business have similar management problems. Many business families could do a better job of managing their financial life by setting clearer goals and by controlling spending better. They usually need to devote more attention to the development of the next generation. And business families, like all families, are typically poor at giving performance feedback to their members. These are all management issues.
But in my opinion, more problems in families are due to their lack of governance and leadership. In the governance area, family members are not clear about the family's mission or core values; or they lack adequate rules and policies to guide behavior; or maybe they haven't developed a forum and process to discuss important issues and mediate differences among family members fairly. In leadership, they lack a clear vision for the future; or they haven't accepted the need to change in order to adapt to the environment; or they are uninspired. It takes deep inspiration to tackle important challenges.
